Dave and Katy’s Travels | An Investment, retirement, and travel blog

Wesabe Explanation

There are piles of Web2.0 tools out there these days that will track your spending, help you with grocery lists, keep track of who owes you money, etc. I kept hearing about Wesabe, where people said it was growing popular, was very useful, going to change personal finance, etc. The problem was, I didn’t get a good explanation of what it actually did, just that it was “good”.

So anyway, I finally broke down and created an account to try it out. It turned out to be very useful. Here’s the basic rundown:

1. You go to your credit card website (or bank website), and download activity. So far I haven’t found any accounts of mine that don’t have this option.
2. You take this file you download, and go to your account in Wesabe, and upload the file.
3. It has a record then for every purchase (or deposit) into your accounts.
4. You go through each record, and categorize these things. So you put your Chili’s purchase under restaurants, Jewel under groceries, AT&T under utilities, etc. Once you categorize a record, Wesabe will automatically categorize other similar things (all other AT&T bills will be flagged as Utilities for example)
5. Once you’re all done, you can look at number of months of data, and see where on average your money has gone.

Now for #4, the categories you choose don’t matter too much. I think the key is to focus your categories on certain behaviors. For example, my wife and I tend to go to restaurants instead of eating in. So I wanted a category for restaurants and one for groceries. Our cell phone bill is constant and we don’t have a land line, so there wasn’t much point in making “telephone” category. However, some people may find that useful if they have large / changing bills.

So once I was able to look at our income and expenses in their categories, I could easily see where our money goes (which is usually step #1 in budgeting). Frankly, the menus are a little confusing at times, but if you poke around you can find what I’m talking about.

Our numbers

Earnings: In the last 8 months, you’ve earned an average of $9,355.70 per month.

Expenses: In the last 8 months, you’ve spent an average of $7,455.22 per month.

First, we have our 401k and stock purchase deductions before our income ever comes in, so there’s a lot of savings beyond the numbers here. So you can see that we’re theoretically gaining almost 2k per month after expenses and savings. If you look at our expenses chart though, you can see that our expenses are somewhat random. In general, what I’ve seen is the below:

• Mortgage: $1800 (will rise to around $2300 once our property taxes have been recalculated)
• Extra Savings: $1200
• Restaurants: $800
• Fuel: $400
• Utilities: $400
• Auto: $450
• Cash: $400
• Etc

Following the 80/20 rule (which I love), I figure I should mainly focus on the above categories as they will give the most benefit if we reduce them. So Wesabe helped me filter through hundreds of expenses to see where our money drains are. I can work on these later and figure out where savings may be.